artl_10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the quarterly period ended: September 30, 2025

☐	TRANSITION REPORT PERSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the transition period from ___________ to ___________

Commission File Number: 001-38951

ARTELO BIOSCIENCES, INC.

(Exact name of registrant as specified in its charter)

Nevada		33-1220924
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

505 Lomas Santa Fe, Suite 160, Solana Beach, CA USA		92075
(Address of principal executive offices)		(Zip Code)

(858) 925-7049

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.001 par value per share	ARTL	The Nasdaq Stock Market, LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes ☐ No ☒

The Registrant had 2,018,746 shares of common stock issued and outstanding as of November 10, 2025.

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION

Item 1.	Financial Statements	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	33
Item 4.	Controls and Procedures	33

PART II - OTHER INFORMATION

Item 1.	Legal Proceedings	34
Item 1A.	Risk Factors	34
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	34
Item 3.	Defaults Upon Senior Securities	34
Item 4.	Mine Safety Disclosures	34
Item 5.	Other Information	34
Item 6.	Exhibits	35

SIGNATURES		36

Table of Contents

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

ARTELO BIOSCIENCES, INC.

Consolidated Balance Sheets

(Unaudited)

(In thousands, except share data)

	September 30,			December 31,
	2025			2024

ASSETS
Current Assets
Cash and cash equivalents	$	1,720		$	2,338
Prepaid expenses and other current assets		107			219
Total Current Assets		1,827			2,557
Operating lease right-of-use assets		73			99
Digital assets		325			-
Intangible asset		2,039			2,039
Other assets		3			3
TOTAL ASSETS	$	4,267		$	4,698

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued liabilities	$	3,868		$	1,676
Due to related parties		32			61
Operating lease liabilities - current portion		39			35
Accrued interest - convertible notes		46			-
Convertible notes		875			-
Total Current Liabilities		4,860			1,772

Operating lease liabilities		40			69
TOTAL LIABILITIES		4,900			1,841

STOCKHOLDERS' EQUITY
Preferred Stock, par value $0.001, 69,444 shares authorized,
0 shares issued and outstanding as of September 30, 2025 and December 31, 2024		-			-
Common Stock, par value $0.001, 500,000,000 shares authorized and
1,555,493 and 567,582 shares issued and outstanding as of September 30, 2025, and December 31, 2024, respectively		2			1
Additional paid-in capital		58,491			53,194
Accumulated deficit		(58,849	)		(50,136	)
Accumulated other comprehensive loss		(277	)		(202	)
TOTAL STOCKHOLDERS' (DEFICIT) EQUITY		(633	)		2,857

TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY	$	4,267		$	4,698

Table of Contents

ARTELO BIOSCIENCES, INC.

Consolidated Statements of Operations and Comprehensive Loss

(Unaudited)

(In thousands, except per share data)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2025			2024			2025			2024

OPERATING EXPENSES
General and administrative	$	1,814		$	870		$	4,088		$	2,779
Research and development		1,275			325			4,530			3,517
Total operating expenses		3,089			1,195			8,618			6,296

Loss from operations		(3,089	)		(1,195	)		(8,618	)		(6,296	)

OTHER INCOME (EXPENSE)
Interest income		5			-			13			-
Interest expense		(111	)		-			(183	)		-
Net change in fair value of digital assets		75			-			75			-
Net change in fair value of trading marketable securities		-			63			-			248
Total other income (expense)		(31	)		63			(95	)		248

Provision for income taxes		-			-			-			-

NET LOSS	$	(3,120	)	$	(1,132	)	$	(8,713	)	$	(6,048	)

OTHER COMPREHENSIVE INCOME (LOSS)
Foreign currency translation adjustments		18			(15	)		(75	)		(15	)
Total other comprehensive income (Loss)		18			(15	)		(75	)		(15	)

TOTAL COMPREHENSIVE LOSS	$	(3,102	)	$	(1,147	)	$	(8,788	)	$	(6,063	)

Basic and diluted loss per share of common stock	$	(3.97	)	$	(2.10	)	$	(12.48	)	$	(11.28	)

Basic and diluted weighted average of shares of common stock outstanding		787			538			698			536

Table of Contents

ARTELO BIOSCIENCES, INC.

Consolidated Statements of Stockholders’ (Deficit) Equity

(Unaudited)

(In thousands)

					Additional					Accumulated Other
	Common Stock				Paid-in		Accumulated			Comprehensive
	Shares		Amount		Capital		Deficit			Income (loss)			Total

Balance, December 31, 2024		567	$	1	$	53,194	$	(50,136	)	$	(202	)	$	2,857

Stock based compensation		-		-		192		-			-			192
Net loss for the period		-		-		-		(2,372	)		-			(2,372	)
Other comprehensive loss		-		-		-		-			(25	)		(25	)
Balance, March 31, 2025		567	$	1	$	53,386	$	(52,508	)	$	(227	)	$	652

Common stock issued for cash, net of issuance costs		137		-		1,081		-			-			1,081
Stock based compensation		-		-		150		-			-			150
Net loss for the period		-		-		-		(3,221	)		-			(3,221	)
Other comprehensive loss		-		-		-		-			(68	)		(68	)
Balance, June 30, 2025		704	$	1	$	54,617	$	(55,729	)	$	(295	)	$	(1,406	)

Common stock issued for cash, net of issuance costs		750		1		3,310		-			-			3,311
Warrants exercised		101		-		132		-			-			132
Stock based compensation		-		-		432		-			-			432
Net loss for the period		-		-		-		(3,120	)		-			(3,120	)
Other comprehensive loss		-		-		-		-			18			18
Balance, September 30, 2025		1,555	$	2	$	58,491	$	(58,849	)	$	(277	)	$	(633	)

						Additional					Accumulated Other
	Common Stock				Paid-in		Accumulated				Comprehensive
	Shares		Amount		Capital		Deficit			Income (loss)			Total

Balance, December 31, 2023		532	$	1	$	52,264	$	(40,310	)	$	(203	)	$	11,752

Common stock issued for cash		6		-		55		-			-			55
Stock based compensation		-		-		213		-			-			213
Net loss for the period		-		-		-		(2,483	)		-			(2,483	)
Balance, March 31, 2024		538	$	1	$	52,532	$	(42,793	)	$	(203	)	$	9,537

Stock based compensation		-		-		195		-			-			195
Net loss for the period		-		-		-		(2,433	)		-			(2,433	)
Balance, June 30, 2024		538	$	1	$	52,727	$	(45,226	)	$	(203	)	$	7,299

Stock based compensation		-		-		209		-			-			209
Net loss for the period		-		-		-		(1,132	)		-			(1,132	)
Other comprehensive loss		-		-		-		-			(15	)		(15	)
Balance, September 30, 2024		538	$	1	$	52,936	$	(46,358	)	$	(218	)	$	6,361

Table of Contents

ARTELO BIOSCIENCES, INC.

Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

	Nine Months Ended
	September 30,
	2025			2024

CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(8,713	)	$	(6,048	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation		774			617
Net change in fair value of trading marketable securities		-			(248	)
Net change in fair value of digital assets		(75	)		-
Non-cash lease expense		26			24
Amortization of debt discounts and debt issuance costs		137			-
Changes in operating assets and liabilities:
Prepaid expenses and other current assets		111			518
Accounts payable and accrued liabilities		2,140			(629	)
Accounts payable - related parties		(29	)		5
Accrued interest		46			-
Fixed cash payments related to operating leases		(26	)		(22	)
Net cash used in operating activities		(5,609	)		(5,783	)

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of digital assets		(250	)		-
Investment in trading marketable securities		-			(481	)
Proceeds from disposition of marketable securities		-			7,750
Net cash (used in) provided by investing activities		(250	)		7,269

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock for cash, net		4,391			55
Proceeds from issuance of convertible notes, net		737			-
Proceeds from exercise of warrants		132			-
Net cash provided by financing activities		5,260			55

Effect of exchange rate changes on cash		(19	)		1

Net change in cash and cash equivalents		(618	)		1,542
Cash and cash equivalents - beginning of period		2,338			2,815
Cash and cash equivalents - end of period	$	1,720		$	4,357

SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for interest	$	-		$	-
Cash paid for income taxes	$	-		$	-

NON-CASH FINANCING AND INVESTING ACTIVITIES:
Initial recognition of the right-of-use asset and lease liability	$	-		$	111

Table of Contents

ARTELO BIOSCIENCES, INC.

Notes to the Consolidated Financial Statements

(In thousands, except share and per share data and units of digital assets)

NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS

ARTELO BIOSCIENCES, INC. (“we”, “us”, “our”, the “Company”) is a Nevada corporation incorporated on May 2, 2011, and based in Solana Beach, California. The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America (“GAAP”), and the Company’s fiscal year end is December 31.

The Company registered wholly owned subsidiaries in Ireland, Trinity Reliant Ventures Limited, on November 11, 2016, and in the United Kingdom (“UK”), Trinity Research & Development Limited, on June 2, 2017. On January 8, 2020, Trinity Research and Development Limited changed its name to Artelo Biosciences Limited. The Company incorporated a wholly owned subsidiary in Canada, Artelo Biosciences Corporation, on March 18, 2020. Operations in the subsidiaries have been consolidated in the financial statements.

The Company is a clinical stage biopharmaceutical company focused on developing therapeutics that target lipid-signaling pathways, including treatments intended to modulate the endocannabinoid system (the “ECS”), a family of receptors and neurotransmitters that form a biochemical communication network throughout the body.

Going Concern

The Company has incurred losses since inception and incurred a net loss of $8,713 during the nine months ended September 30, 2025. As of September 30, 2025, we had cash and cash equivalents of $1,720.

In July 2023, the Company filed a $75,000 in aggregate value shelf registration statement on Form S-3 which became effective on July 14, 2023. The shelf registration statement is effective for three years and permits the Company to sell, from time to time, up to $75,000 of the Company’s common stock, preferred stock, debt securities, warrants, and/or units subject to a limit of one-third (1/3) of the Company’s public float within a twelve (12) month period if the public float of the Company is less than $75,000 as of relevant measurement dates under applicable securities laws.

On May 1, 2025, the Company issued at-market, unsecured convertible notes with gross proceeds of $900. The convertible notes bear interest at 12.0% and have a maturity of 180 days. The convertible notes are subject to voluntary and automatic provisions for conversion into the Company’s common stock, as well as conversion into warrants to purchase the Company’s common stock for a five-year period at a price of $6.24 per share, as adjusted for the subsequent reverse stock split. Certain members of the Company’s board of directors, an officer and consultants to the Company acquired $350 of the convertible notes.

On June 24, 2025, the Company entered into a securities purchase agreement with the purchasers named therein, for the private placement of (i) 136,843 shares of the Company’s common stock at $5.82 per share, (ii) pre-funded warrants to purchase 93,180 shares of common stock at an exercise price of $0.001 per share at $5.819 per pre-funded warrant, (iii) warrants to purchase 460,046 shares of common stock at an exercise price of $5.82 per share, and (iv) warrants to purchase 230,023 shares of common stock at an exercise price of $10.00 per share. Total gross proceeds were $1,425, net proceeds were $1,079 after transaction costs of $346.

On July 18, 2025, the Company entered into an At-The-Market Offering Agreement (the “Sales Agreement”) with R.F. Lafferty & Co., Inc. (“R.F. Lafferty”) under which we may offer and sell up to $6.5 million of shares of our common stock from time to time through an “at the market” offering program under which R.F. Lafferty will act as sales agent. Under the Sales Agreement, the Company will set the parameters for the sale of shares, including the number or dollar amount of shares to be issued, the time period during which sales are requested to be made, limitations on the number or dollar amount of shares that may be sold in any one trading day and any minimum price below which sales may not be made. Subject to the terms and conditions of the Sales Agreement, R.F. Lafferty may sell the shares by methods deemed to be an “at the market” offering as defined in Rule 415 promulgated under the Securities Act of 1933, as amended (the “Securities Act”). We have no obligation to sell any shares under the Sales Agreement and may at any time suspend solicitation and offers under the Sales Agreement. The shares will be issued pursuant to the Company’s shelf registration statement on Form S-3, including the prospectus supplement contained therein, which was declared effective by the SEC on July 14, 2023. During the quarter ended September 30, 2025, 50,858 shares were sold under the Sales Agreement for net proceeds of $442.

Table of Contents

On August 4, 2025, the Company entered into a securities purchase agreement for an at-the market PIPE (private investment in public equity) for the purchase and sale of securities at a price of $10.45 per unit, consisting of: (a) 906,687 shares of common stock (or pre-funded warrants in lieu thereof); (b) three-year warrants to purchase 906,687 shares of common stock at an exercise price of $10.20 per share; and (c) three-year warrants to purchase 906,687 shares of common stock at an exercise price of $50.00 per share, for expected aggregate gross proceeds of approximately $9,475. The Company agreed that the net proceeds of the sale will be used to purchase Solana’s native token, SOL. On August 19, 2025, this securities purchase agreement was terminated with mutual consent of the Company and investors and all proceeds received from investors were returned.

On September 4, 2025, the Company entered into an Underwriting Agreement (the “Underwriting Agreement”) with R.F. Lafferty, the sole book-running manager and underwriter, relating to an underwritten offering of (i) 640,924 shares of common stock at a price to the public of $4.40 per share, and (ii) pre-funded warrants to purchase up to 40,894 shares of common stock at an exercise price of $0.001 per share, at a price to the public of $4.399 per pre-funded warrant, for aggregate gross proceeds of approximately $3,000, before deducting underwriting discounts and commissions and other estimated offering expenses of $130 resulting in net proceeds of $2,870. The offering was closed on September 5, 2025. The Company delivered the securities to the R.F. Lafferty on the same day.

To continue operations, the Company will be required to raise additional funds by completing additional equity or debt offerings or licensing our product candidates. There can be no assurance that the Company will be successful in acquiring additional funding, that the Company’s projections of its future working capital needs will prove accurate, or that any additional funding would be sufficient to continue operations in future years. These conditions raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the consolidated financial statements are issued. The accompanying consolidated financial statements do not include any adjustments to reflect the future effects on the recoverability and classification of assets or the amounts and classification of liabilities if the Company is unable to continue as a going concern.

Negative Global or National Events

Businesses have been and will continue to be impacted by a number of challenging global and national events and circumstances that continue to evolve, including tariffs, trade disputes, extreme weather conditions, increased economic uncertainty, inflation, interest rate fluctuation, recent and any potential future financial institution failures, and conflicts in Eastern Europe, the Middle East and in other countries. The extent of the impact of these events and circumstances on our business, operations and development timelines and plans remains uncertain, and will depend on certain developments, including the duration and scope of the events and their impact on our development activities, third-party manufacturers, and other third parties with whom we do business, as well as its impact on regulatory authorities and our key scientific and management personnel. We have been and continue to actively monitor the potential impacts that these various events and circumstances may have on our business, and we take steps, where warranted, to minimize any potential negative impacts on our business resulting from these events and circumstances. The ultimate impact of these global and national events and circumstances, either individually or in aggregate, is highly uncertain and subject to change.

Reverse Stock Split

On June 12, 2025, the Company filed with the Secretary of State of the State of Nevada a Certificate of Change, pursuant to Nevada Revised Statutes 78.209, to effect a one-for-six (1-for-6) reverse stock split (the “Reverse Split”) of the Company’s issued and outstanding common stock, par value $0.001 per share. The Reverse Split was effective as of 12:01 a.m. Eastern Time on June 13, 2025. Pursuant to the Nevada Revised Statutes 78.207, the Company’s board of directors has the authority to effect a reverse stock split without stockholder approval if the number of authorized shares of common stock and the number of outstanding shares of common stock are proportionally reduced.

As a result of the Reverse Split, each six (6) pre-split shares of common stock outstanding were automatically combined into one (1) new share of common stock without any action on the part of the holders, and the number of outstanding shares of common stock was reduced from 3,280,000 to approximately 546,667. The number of authorized shares of common stock was reduced from 50,000,000 to 8,333,333, while the number of authorized shares of preferred stock was reduced from 416,667 to 69,444. On August 28, 2025, the Company held a special meeting of stockholders in which the shareholders voted to increase the authorized number of shares of common stock from 8,333,333 shares to 500,000,000 shares.

Table of Contents

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The Company prepares its financial statements in accordance with rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) and GAAP in the United States of America. The accompanying interim financial statements have been prepared in accordance with GAAP for interim financial information in accordance with Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the Company’s opinion, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended September 30, 2025, are not necessarily indicative of the results for the full year. While management of the Company believes that the disclosures presented herein are adequate and not misleading, these interim financial statements should be read in conjunction with the audited financial statements and the footnotes thereto for the year ended December 31, 2024, contained in the Company’s Form 10-K filed with the SEC on March 3, 2025.

All amounts in these financial statements, notes and tables have been rounded to the nearest thousand dollars, except share and per share amounts, unless otherwise indicated.

Basis of Consolidation

The financial statements have been prepared on a consolidated basis including the Company’s wholly owned subsidiaries, Trinity Reliant Ventures Limited, Artelo Biosciences Limited and Artelo Biosciences Corporation. All intercompany transactions and balances have been eliminated.

Research and Development (“R&D”)

R&D expenses consist primarily of costs related to clinical studies and outside services, personnel expenses, and other R&D expenses. Clinical studies and outside services costs relate primarily to services performed by clinical research organizations associated with clinical trials and related clinical or development manufacturing costs, materials, and supplies, filing fees, regulatory support, and other third-party fees. Personnel expenses relate primarily to salaries and benefits. R&D expenditures are charged to operations as incurred.

The Company recognizes R&D tax credits received from the United Kingdom government for spending on R&D as an offset of R&D expenses. The Company received R&D tax credits of $704 and $1,349 during the nine months ended September 30, 2025, and 2024, respectively.

Cash and Cash Equivalents

Cash and cash equivalents include cash in banks, money market funds, commercial paper, and certificates of term deposits with maturities of less than three months from inception, which are readily convertible to known amounts of cash and which, in the opinion of management, are subject to an insignificant risk of loss in value. The Company had $1,720 and $2,338 in cash and cash equivalents at September 30, 2025, and December 31, 2024, respectively.

Periodically, the Company may carry cash balances at financial institutions more than the federally insured limit of $250 per institution. The amount in excess of the Federal Deposit Insurance Corporation insurance as of September 30, 2025, was approximately $1,220. The Company has not experienced losses on these accounts and management believes, based upon the quality of the financial institutions, that the credit risk with regard to these deposits is not significant.

Marketable Securities

Our investments in debt securities are carried at fair value. Investments in debt securities that are not classified as held-to-maturity are carried at fair value and classified as either trading or available-for-sale. Realized and unrealized gains and losses on trading debt securities are charged to income and unrealized gains and losses on available-for-sale debt securities are included in other comprehensive income or loss. The marketable securities held by the Company, classified as trading marketable securities, had an outstanding balance of $0 as of September 30, 2025, and December 31, 2024.

Intangible Assets

The Company capitalizes certain costs related to the acquisition of intangible assets. If such assets are determined to have a finite useful life they are amortized on a straight-line basis over the estimated useful life.

Table of Contents

The Company tests its intangible assets for impairment at least annually and whenever events or circumstances change that indicate impairment may have occurred. A significant amount of judgment is involved in determining if an indicator of impairment has occurred. Such indicators may include, among others and without limitation: a significant decline in the Company’s expected future cash flows; a sustained, significant decline in the Company’s stock price and market capitalization; a significant adverse change in legal factors or in the business climate of the Company’s segments; unanticipated competition; and slower growth rates. The Company determined that there was no impairment of its intangible assets at September 30, 2025, and December 31, 2024.

Digital Assets

The Company’s digital assets consist solely of our investment in Solana’s native token, SOL, which the Company intends to hold for a period of at least one year from the date of purchase. The Company retains ownership of and control over its digital assets and utilizes a third-party custodial service to secure it. The cost basis of the Company’s digital assets is calculated using the first-in, first-out (FIFO) method.

The Company initially records its digital assets at their cost, which includes the capitalization of any transaction costs or fees, which are subsequently, remeasured at fair value based on the SOL price quoted from its principal market at the end of each reporting period in accordance with ASC 820, Fair Value Measurement, with changes in fair value recognized on the consolidated statements of operations.

Foreign Currency Transactions

The Company has operations outside of the United States, which results in exposure to market risks from changes in foreign currency rates. The financial risk arises from the fluctuations in foreign exchange rates and the degrees of volatility in these rates. Currently the Company does not use derivative instruments to reduce its exposure to foreign currency risk. Nonmonetary assets and liabilities are translated at historical rates and monetary assets and liabilities are translated at exchange rates in effect at the end of the year. Revenues and expenses are translated at average rates for the year. Gains and losses from translation of foreign currency financial statements into U.S. dollars are included as other comprehensive income.

Financial Instruments

The Company follows ASU 2022-03, ASC Subtopic “Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions” (“ASC 820”), which defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:

Level 1

Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

Level 2

Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

Level 3

Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

Table of Contents

The carrying amounts shown of the Company’s financial instruments including cash and cash equivalents and accounts payable approximate fair value due to the short-term maturities of these instruments.

Stock-Based Compensation

The Company utilizes the Black-Scholes option pricing model to estimate the fair value of stock option awards at the date of grant, which requires the input of highly subjective assumptions, including expected volatility and expected life. Changes in these inputs and assumptions can materially affect the measure of estimated fair value of our share-based compensation. These assumptions are subjective and generally require significant analysis and judgment to develop. When estimating fair value, some of the assumptions will be based on, or determined from, external data and other assumptions may be derived from our historical experience with stock-based payment arrangements. The appropriate weight to place on historical experience is a matter of judgment, based on relevant facts and circumstances. The Company accounts for forfeitures of stock options as they occur.

Net Loss per Share of Common Stock

Basic earnings per share (“EPS”) is computed based on the weighted average number of shares of common stock outstanding during the period. Diluted EPS is computed based on the weighted average number of shares of common stock plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method and as if converted method. Dilutive potential common shares include outstanding stock options and warrants.

For the nine months ended September 30, 2025, and 2024, the following common stock equivalents were excluded from the computation of diluted net loss per share as the result was anti-dilutive.

	September 30,		September 30,
	2025		2024
Stock options		227,842		127,184
Warrants		746,086		23,316
		973,928		150,500

Segment Reporting

Operating segments are defined as components of an enterprise about which separate and discrete information is available for evaluation by the chief operating decision-maker (“CODM”) in deciding how to allocate resources and assess performance. The Company’s CODM is its chief executive officer. The Company’s CODM evaluates the Company’s operations and manages its business as a single operating segment. All of the Company’s long-lived assets are held in the United States. Refer to Note 3 for the Company’s disclosure on its single operating segment.

New Accounting Standards Adopted

During the nine months ended September 30, 2025, the Company adopted ASU 2023-08, Intangibles-Goodwill and Other-Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets (“ASU 2023-08”). The standard requires all entities holding cryptocurrency assets to measure these assets at fair value and disclose significant holdings. As the current reporting period was the first period in which the Company held cryptocurrency assets, there was no impact on any prior reporting periods as a result of the adoption of this standard.

NOTE 3 – SEGMENT REPORTING

Operating segments comprised of the components of an entity in which separate information is available for evaluation by the Company’s CODM, or group of decision makers, in determining how to allocate resources in evaluating performance. The Company consists of a single reporting segment: life science. The life science segment is comprised of the Company’s development of therapeutics that target lipid-signaling modulation pathways, including the ECS, a network of receptors and neurotransmitters that form a biochemical communication system throughout the body. The Company’s CODM is its chief executive officer.

Table of Contents

The accounting policies of the life science segment are as described in the summary of significant accounting policies. The CODM evaluates the performance of the life science segment based on the Company’s net loss as reported on the income statement as consolidated net loss. The Company’s segment assets are reported on the balance sheet as its total consolidated assets.

The Company has not generated any revenue since its inception and expects to continue to incur losses into the foreseeable future as it continues to conduct research and development related activities through all stages of product development and clinical trials and subsequently seek approval from the respective regulatory authorities. The Company’s CODM utilizes cash forecast models to determine the Company’s investment in the life sciences segment. These models are reviewed regularly to monitor the Company’s operating results and performance and compared to the Company’s cash-based forecasts.

	Three Months Ended
	September 30,
	2025		2024
General and administrative
Employee and director compensation	$	229	$	228
Stock-based compensation		240		135
Professional fees		1,013		181
Other general and administrative ^(a)		332		326
Total general and administrative	$	1,814	$	870

	Nine Months Ended
	September 30,
	2025		2024

General and administrative
Employee and director compensation	$	700	$	702
Stock-based compensation		440		408
Professional fees		2,050		734
Other general and administrative ^(a)		898		935
Total general and administrative	$	4,088	$	2,779

	Three Months Ended
	September 30,
	2025		2024

Research and development
Employee compensation	$	267	$	157
Stock-based compensation		188		74
Professional fees		262		1,137
Other research and development ^(b)		558		(1,043	)
Total research and development	$	1,275	$	325

Table of Contents

	Nine Months Ended
	September 30,
	2025			2024

Research and development
Employee compensation	$	743		$	625
Stock-based compensation		331			209
Professional fees		3,466			3,483
Other research and development ^(b)		(10	)		(800	)
Total research and development	$	4,530		$	3,517

(a)	Consists of investor relations, travel and other office expenses.
(b)	Consists of supplies and other items used in research and development activities.

NOTE 4 – DIGITAL ASSETS

The Company’s digital asset holdings as of September 30, 2025 and December 31, 2024 consist of the following:

	As of September 30, 2025						As of December 31, 2024
	Units		Cost Basis		Fair Value		Units		Cost Basis		Fair Value
Solana (SOL)		1,524.69	$	250	$	325		-	$	-	$	-
				250		325				-		-

The following represents the movement of the fair value of the Company’s digital asset holdings:

	Solana (SOL)
December 31, 2024	$	-
Purchase of digital assets		250
Change in fair value		75
September 30, 2025	$	325

NOTE 5 – RELATED PARTY TRANSACTIONS

During the nine months ended September 30, 2025, and 2024, a company owned by the Senior Vice President, European Operations, provided consulting services totaling $14 and $7, respectively. As of September 30, 2025, and December 31, 2024, there was $1 and $1, outstanding, respectively.

During the nine months ended September 30, 2025, and 2024, a company significantly influenced by a director of a subsidiary of the Company provided professional services totaling $71 and $87, respectively. As of September 30, 2025, and December 31, 2024, there was $24 and $36 outstanding, respectively.

During the nine months ended September 30, 2025, and 2024, a company controlled by a director of a subsidiary of the Company provided professional services totaling $55 and $58, respectively. As of September 30, 2025, and December 31, 2024, there was $7 and $24 outstanding, respectively.

NOTE 6 – CONVERTIBLE NOTES

Between April 27, 2025, and May 1, 2025, the Company entered into subscription agreements with various investors, pursuant to which the Company issued convertible notes (the “Notes”) to the investors in an aggregate principal amount of $900 (collectively, the “Notes Offering”). A portion of the Notes shall be convertible into shares of the Company’s common stock, at the election of each investor, pursuant to the Voluntary Conversion (defined below) and the remaining portion of each Note shall be converted into warrants to purchase shares of the Company’s common stock. The sale and issuance of the Notes closed on May 1, 2025.

Table of Contents

At the Maturity Date (defined below), the investor may (at the investor’s sole option) convert all of that certain unpaid portion of principal and accrued interest of the investor’s Note into shares of common stock (the “Voluntary Conversion”), specifically into that number of shares of common stock (the “Converted Shares”) equal to the unpaid principal balance and any accrued interest of each Note divided by $7.74. The amount of principal balance and any accrued interest of each Note convertible pursuant to the Voluntary Conversion shall be the number of Converted Shares multiplied by $6.24. Should the investor not elect Voluntary Conversion, such portion of the unpaid principal balance and any accrued interest of each Note subject to Voluntary Conversion shall be immediately due and payable in cash.

The Notes will accrue interest at a rate of 12% per annum, which will adjust to 20% upon an Event of Default (as defined in the Notes). All unpaid principal, together with any then unpaid and accrued interest and other amounts payable thereunder, shall be due and payable 180 days after the closing of the Notes Offering (the “Maturity Date”).

Upon the closing of the Notes, the Company recorded deferred debt costs of $163 associated with transaction costs of the Notes. As of September 30, 2025, the net carrying value of the Notes is $875 which includes principal of $900 and deferred debt costs of $25. During the nine months ended September 30, 2025, the Company recorded interest expense of $183 associated with the accretion of accrued interest of $46 and $137 amortization of deferred debt costs.

Effective October 28, 2025, the Company entered into an agreement pursuant to which it issued and sold to certain investors, and the investors purchased (by converting all or a portion of the unconverted portion of unpaid principal balance and accrued interest due to such investors upon the maturity of the convertible promissory notes issued to the investors on May 1, 2025): (i) convertible notes in an aggregate principal amount of $690; and (ii) warrants to purchase an aggregate of 438,182 shares of the Company’s common stock, par value $0.001 per share, at an exercise price of $3.40 per share. The notes will accrue interest at a rate of 12% per annum. All unpaid principal, together with any then unpaid and accrued interest and other amounts payable thereunder, shall be due and payable six months after the effective date. Each warrant is immediately exercisable after issuance for five (5) years.

NOTE 7 - EQUITY

Preferred Stock

The Company has authorized 69,444 shares of preferred stock with a par value of $0.001 per share.

As of September 30, 2025, and December 31, 2024, there were no shares of preferred stock issued or outstanding.

Common Stock

The Company has authorized 500,000,000 shares of common stock with a par value of $0.001 per share. Each share of common stock entitles the holder to one vote, in person or proxy, on any matter on which an action of the stockholders of the Company is sought.

As of September 30, 2025, and December 31, 2024, there were 1,555,493 and 567,582 shares of common stock issued and outstanding, respectively.

On June 26, 2025, the Company closed a private placement of (i) 136,843 shares of the Company’s common stock at $5.82 per share, (ii) pre-funded warrants to purchase 93,180 shares of common stock at an exercise price of $0.001 per share at $5.819 per pre-funded warrant, (iii) warrants to purchase 460,046 shares of common stock at an exercise price of $5.82 per share, and (iv) warrants to purchase 230,023 shares of common stock at an exercise price of $10.00 per share. Each share or, at the election of the purchaser in lieu of shares, each pre-funded warrant, was issued and sold along with two (2) $5.82 warrants and one (1) $10.00 warrant. The combined purchase price for the securities was (i) $6.195 per share of common stock and three accompanying warrants and (ii) $6.194 per pre-funded warrant and three accompanying warrants. Total gross proceeds were $1,425, net proceeds were $1,079 after transaction costs of $346.

On July 18, 2025, the Company entered into a Sales Agreement with R.F. Lafferty under which we may offer and sell up to $6.5 million of shares of our common stock from time to time through an “at the market” offering program under which R.F. Lafferty will act as sales agent. Under the Sales Agreement, the Company will set the parameters for the sale of shares, including the number or dollar amount of shares to be issued, the time period during which sales are requested to be made, limitations on the number or dollar amount of shares that may be sold in any one trading day and any minimum price below which sales may not be made. Subject to the terms and conditions of the Sales Agreement, R.F. Lafferty may sell the shares by methods deemed to be an “at the market” offering as defined in Rule 415 promulgated under the Securities Act. We have no obligation to sell any shares under the Sales Agreement and may at any time suspend solicitation and offers under the Sales Agreement. The shares will be issued pursuant to the Company’s shelf registration statement on Form S-3, including the prospectus supplement contained therein, which was declared effective by the SEC on July 14, 2023. During the quarter ended September 30, 2025, 50,858 shares were sold under the Sales Agreement for net proceeds of $442.

Table of Contents

On September 4, 2025, the Company entered into an Underwriting Agreement with R. F. Lafferty, the sole book-running manager and underwriter, relating to an underwritten offering of (i) 640,924 shares of common stock at a price to the public of $4.40 per share, and (ii) pre-funded warrants to purchase up to 40,894 shares of common stock at an exercise price of $0.001 per share at a price to the public of $4.399 per pre-funded warrant, for aggregate gross proceeds of approximately $3,000, before deducting underwriting discounts and commissions and other estimated offering expenses of $130 resulting in net proceeds of $2,870. The offering was closed on September 5, 2025.

Warrants

A summary of activity of the warrants during the nine months ended September 30, 2025, is as follows:

						Weighted
	Number of			Weighted Average		Average
	Shares			Exercise Price		Life (years)
Outstanding, December 31, 2024		23,315		$	67.50		0.79
Granted		824,143			6.04		5.00
Expired		-			-		-
Exercised		(101,372	)		1.30		-
Outstanding, September 30, 2025		746,086		$	8.60		4.59

The intrinsic value of the warrants as of September 30, 2025, is $254. All of the outstanding warrants are exercisable as of September 30, 2025.

2018 Equity Incentive Plan

On February 28, 2025, the number of shares available under the Company’s 2018 Equity Incentive Plan, as amended (the “2018 Plan”), was increased by 80,693 shares of common stock.

As of September 30, 2025, the 2018 Plan permits the Company to issue up to an aggregate of 335,564 shares of common stock of which 107,722 shares are available to be issued.

The following is a summary of stock option activity during the nine months ended September 30, 2025:

	Options Outstanding				Weighted Average
	Number of		Weighted Average		Remaining Life
	Options		Exercise Price		(years)
Outstanding, December 31, 2024		128,976	$	11.03		7.76
Granted		98,866		11.03		10.00
Exercised		-		-		-
Forfeited/canceled		-		-		-
Outstanding, September 30, 2025		227,842	$	11.03		8.20

Exercisable options, September 30, 2025		73,112	$	12.78		7.21

Table of Contents

Valuation

The Company utilizes the Black-Scholes model to value its stock options. During the nine months ended September 30, 2025, the Company utilized the following assumptions:

	Nine Months Ended
	September 30,
	2025
Expected term	5.50 - 5.78 years
Expected average volatility	97 - 98		%
Expected dividend yield		-
Risk-free interest rate		3.87	%

During the nine months ended September 30, 2025, the Company granted 98,866 options, valued at $849 of which 41,493 options, valued at $356, were for related parties. As of September 30, 2025, $1,094 remains unamortized, of which $613 is for related parties. The intrinsic value of options outstanding as of September 30, 2025, and December 31, 2024, is $0 and $0, respectively.

NOTE 8– INTANGIBLE ASSET

The Company has capitalized the costs associated with acquiring the exclusive worldwide license to develop and commercialize products comprising or containing the compound ART27.13 as an intangible asset at a value of $2,039 as of September 30, 2025, and December 31, 2024.

The amount capitalized consisted of a $1,500 payment and the fair value of 681 shares of common stock of $539. During the nine months ended September 30, 2025, no additional costs met the criteria for capitalization as an intangible asset.

NOTE 9 - LEASE

On May 12, 2021, the Company entered into a lease arrangement for office space in the U.S. with Beckman/Lomas LLC, an entity controlled by a close family member of a director. Effective June 1, 2022, the related party divested its interests in the property, and as such, the lease agreement no longer constitutes a related party transaction. On March 6, 2024, the Company entered into an amended agreement with the landlord to extend the lease commencing in September 2024, and effective until August 2027.

The following summarizes right-of use asset and lease information about the Company’s operating leases as of September 30, 2025:

	Nine Months Ended
	September 30,
	2025			2024

Lease cost
Operating lease cost	$	26		$	24

Other information
Cash paid for operating cash flows from operating leases	$	26		$	22
Right-of-use assets obtained in exchange for new operating lease liability	$	-		$	111

Weighted-average remaining lease term — operating leases (year)		1.83			2.83
Weighted-average discount rate — operating leases		7.50	%		7.50	%

Table of Contents

Future minimum lease payments under the operating lease liability have non-cancellable lease payments at September 30, 2025, as follows:

	Total
Year Ended December 31,
2025	$	11
2026		43
2027		30
2028		-
Thereafter		-
		84
Less: Imputed interest		(5	)
Operating lease liabilities		79

SEC Form 10-Q filed by Artelo Biosciences Inc.